[nfbmi-talk] the mrs aaudit in accessible format or part of it

[joe harcz Comcast]

Because this was not properly paginated I could not convert it until I went through the back door. Regardless, this is relevant to MCB and neither commissioners nor the public get appappropriate documentation about the fiscal affairs of MCB to ensure that programs are run on the up and up.

 

In fact I wonder if MCB makes the Auditor General go through FOIA to request financial  data?

 

Moreover, the real issues are not the ones cited herein, but rather systemic issues related to vendor compliance and whether or not MCB counselors and management follow the Rehab Act and PA 260. I mean how many MCB customers even have their IPEs in accessible format? How many are determined eeligable for services within the required time period especially those that are supposed to be fastracked under the 1998 amendments if they are also determined to be legally blind and have SSI/SSDI by the SSA?

 

And there are of course other issues which have been documented over the years.

 

Joe Harcz

 

 

 

TABLE OF CONTENTS 

 REHABILITATION SERVICE EXPENDITURES 

MICHIGAN REHABILITATION SERVICES 

DEPARTMENT OF LICENSING AND REGULATORY AFFAIRS 

  Page 

INTRODUCTION 

 Report Summary 1 

Report Letter 3 

Description of Agency 7 

Audit Objectives, Scope, and Methodology and Agency Responses 

 and Prior Audit Follow-Up 9 

 COMMENTS, FINDINGS, RECOMMENDATIONS, 

AND AGENCY PRELIMINARY RESPONSES 

 Propriety of Service Payments 13 

1. Vehicles and Related Costs 13 

2. Equipment Recovery 15 

3. Expenditures for Maintenance Services 17 

4. Receipts for Purchased Services 18 

5. Identity Verification 20 

Coordination of Benefits and Services 21 

6. Comparable Benefits and Services 22 

Viable and Sustainable Employment 23 

  SUPPLEMENTAL INFORMATION 

 Exhibit 1 - Office Locations and Service Areas 26 

Exhibit 2 - Fiscal Year 2009-10 Expenditures 28 

 GLOSSARY 

 Glossary of Acronyms and Terms 30 

  Description of Agency 

  Michigan Rehabilitation Services (MRS), Department of Licensing and Regulatory 

Affairs, offers services to persons who need vocational rehabilitation services to prepare 

for, find, and retain a job. MRS serves customers at 36 field offices and 95 Michigan 

Works! Service Centers that are located throughout Michigan (see Exhibit 1). In 

addition, MRS provides services to customers at the Michigan Career and Technical 

Institute, a post-secondary, residential, and vocational trade-training program, with 

campuses located in Plainwell and Detroit, Michigan. 

 MRS's primary activity is the direct provision of vocational rehabilitation services. To be 

eligible for MRS services, customers must have a physical or mental disability that 

interferes with their ability to work except for those who are legally blind and served by 

the Michigan Commission for the Blind. MRS provides eligible customers with 

individualized services to meet their specific needs. Services may include: 

 • Vocational and guidance counseling. 

• Vocational training. 

• Job coaching and job placement. 

• Medical treatment and restoration services. 

• Transportation. 

• College tuition assistance. 

• Assistive technology. 

 MRS also provides specific post-employment services necessary to assist customers in 

maintaining employment. Services may include payment for items such as vehicles, 

vehicle and home modifications, and employment accommodations. 

 Rehabilitation counselors, in conjunction with the customers, determine the services 

that MRS will provide to the customers. The rehabilitation process requires 

considerable professional judgment by the counselor. Counselors service customers 

with a wide range of disabilities and frequently refer customers to receive services from 

other State and local social service agencies, school districts, private rehabilitation 

agencies, hospitals, medical professionals, and potential employers. 

 The U.S. Department of Education provides the majority of MRS's program funding with 

the State's General Fund and local entities providing the State's funding portion. The 

ratio of federal funds to State and local funds is 78.7% federal and 21.3% State and 

local. MRS expended $113.6 million during fiscal year 2009-10, of which $47.1 million 

was spent directly on customer services, excluding vocational counseling, as presented 

in Exhibit 2. MRS served 51,473 customers during fiscal year 2009-10, resulting in an 

average annual cost for services of $915 per customer. MRS had 505 employees as of 

July 31, 2011. 

  Audit Objectives, Scope, and Methodology 

and Agency Responses and Prior Audit Follow-Up 

  Audit Objectives 

Our performance audit* of Rehabilitation Service Expenditures, Michigan Rehabilitation 

Services (MRS), Department of Licensing and Regulatory Affairs, had the following 

objectives: 

 1. To assess the effectiveness* of MRS's efforts to ensure the propriety of service 

payments. 

 2. To assess the effectiveness of MRS's efforts to facilitate the coordination of 

benefits and services. 

 3. To assess the effectiveness of MRS's efforts to determine that services resulted in 

viable and sustainable employment. 

 Audit Scope 

Our audit scope was to examine and evaluate rehabilitation service expenditures and 

other program records within Michigan Rehabilitation Services. We conducted this 

performance audit in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions based on our audit 

objectives. Our audit procedures, conducted from May through August 2011, generally 

covered the period October 1, 2008 through July 31, 2011. 

 As part of our audit report, we included supplemental information that relates to our 

audit objectives (Exhibits 1 and 2). Our audit was not directed toward expressing an 

opinion on this information and, accordingly, we express no opinion on it. 

   * See glossary at end of report for definition. 

Audit Methodology 

We conducted a preliminary review of MRS's operations to form a basis for defining our 

audit scope. Our preliminary review included interviewing MRS staff regarding their 

functions and responsibilities, reviewing MRS's policies and procedures and applicable 

laws and regulations, and analyzing program data. 

 To accomplish our objectives, we selected MRS customers who had received MRS 

services for the period October 1, 2008 through July 31, 2011 and reviewed supporting 

documentation maintained in each customer's case file to determine whether MRS had 

provided the services in accordance with established policies and procedures. We also 

reviewed the case files to ascertain whether comparable benefits and services were 

utilized before MRS funds were expended. In addition, we evaluated the effect that 

MRS services had on the customer's ability to obtain and retain viable and sustainable 

employment. 

 When selecting activities or programs for audit, we use an approach based on 

assessment of risk and opportunity for improvement. Accordingly, we focus our audit 

efforts on activities or programs having the greatest probability for needing improvement 

as identified through a preliminary review. Our limited audit resources are used, by 

design, to identify where and how improvements can be made. Consequently, we 

prepare our performance audit reports on an exception basis. 

 Agency Responses and Prior Audit Follow-Up 

Our audit report contains 6 findings and 6 corresponding recommendations. MRS's 

preliminary response indicated that it agrees with all 6 recommendations. 

 The agency preliminary response that follows each recommendation in our report was 

taken from the agency's written comments and oral discussion subsequent to our audit 

fieldwork. Section 18.1462 of the Michigan Compiled Laws and the State of Michigan 

Financial Management Guide (Part VII, Chapter 4, Section 100) require the Department 

of Licensing and Regulatory Affairs to develop a plan to comply with the audit 

recommendations and submit it within 60 days after release of the audit report to the 

Office of Internal Audit Services, State Budget Office. Within 30 days of receipt, the 

Office of Internal Audit Services is required to review the plan and either accept the plan 

as final or contact the agency to take additional steps to finalize the plan. 

 Within the scope of this audit, we followed up 1 of the 10 prior audit recommendations 

from our July 2002 performance audit of Michigan Rehabilitation Services (45-240-01). 

We also followed up 1 of 10 prior audit recommendations from our March 2009 

performance audit of the Accessible Web-Based Activity and Reporting Environment 

(AWARE) (641-0591-08). MRS complied with 1 of the 2 prior audit recommendations 

included within the scope of our current audit. The other recommendation was rewritten 

in Finding 1, Finding 3, and Finding 4 for inclusion in this report. 

       COMMENTS, FINDINGS, RECOMMENDATIONS, 

AND AGENCY PRELIMINARY RESPONSES 

 immediate need as the customer can replace the vehicle from earnings once 

employment has begun. The guide adds that a vehicle that is needed to transport 

a customer for several years of training should be a vehicle that can be expected to 

last long enough to complete that particular IPE service without major repairs. The 

guide further states that while it is difficult to do comparison-shopping for used 

vehicles, it is still possible to identify several options rather than purchasing the first 

vehicle that passes a vehicle inspection. 

 Of the 100 randomly selected MRS cases reviewed, 22 cases included 23 vehicle 

purchases totaling $498,327. We identified 18 (78%) of 23 vehicle purchases 

totaling $410,513 that were not documented in accordance with MRS policy. Our 

review disclosed: 

 a. MRS did not document in the case records why vehicle purchases were 

essential to the individual's employment needs for 4 vehicle purchases totaling 

$55,496. For example, MRS paid $30,998 for a vehicle and vehicle 

modifications for a customer whose employment goal was to be a homemaker. 

The IPE for the customer stated that the reason for the goal was to allow the 

customer to maintain an independent lifestyle. As more fully described in 

MRS policy 5025, Employment Goal and Outcome, the MRS Homemaker 

Activities Chart outlines the core work areas that the customer will complete 

during the rehabilitation process to become a homemaker. The chart did not 

identify that the purchase of a vehicle was required for any of the core work 

areas to be completed to fulfill the IPE. 

 b. MRS did not document in the case files for which MRS purchased 6 new 

vehicles totaling $266,544 why a used vehicle was not a viable alternative. 

For example, MRS purchased a new vehicle with modifications for $68,000 

when MRS was informed by the vendor at the time of purchase that a used 

vehicle with all necessary modifications was available for $51,185. Without 

appropriate documentation, MRS cannot justify its rationale for spending an 

additional $16,815 for the purchase of a new vehicle. 

  c. The MRS case files for 18 vehicle purchases did not contain basic driverrelated 

documentation required by MRS policy: 

 (1) MRS did not document the required vehicle registration or vehicle title 

and proof of insurance for 12 (67%) of the vehicles purchased. 

 (2) MRS did not document that the customers possessed valid driver's 

licenses for 5 (28%) of the vehicles purchased. 

 RECOMMENDATION 

We recommend that MRS obtain required documentation related to vehicle 

purchases made on behalf of MRS customers. 

 AGENCY PRELIMINARY RESPONSE 

MRS agrees and will improve case management training and the case review 

process so that appropriate documentation is obtained for vehicle purchases made 

on behalf of MRS customers. MRS stated that this will involve increased 

monitoring along with individual, local, and system improvements. 

  FINDING 

2. Equipment Recovery 

MRS had not developed a process to recover equipment purchased for customers 

who no longer used the equipment. As a result, MRS did not recover purchased 

equipment from unrehabilitated customers and subsequently redistribute 

equipment to other MRS customers. 

 MRS policy 6200, Equipment and Tools, states that MRS customers shall be 

informed of their responsibility to offer to return any equipment purchased that is no 

longer being used for its original intended purpose. However, the IPE, a signed 

agreement between MRS and the customer, states that it is the customer's 

responsibility to return any equipment purchased by MRS if the equipment is no 

longer being used as originally planned. 

  AGENCY PRELIMINARY RESPONSE 

MRS agrees and will develop guidelines for recovering equipment purchased for 

customers who no longer use the equipment. MRS stated that, in accordance with 

MRS policy 6200, it will continue to inform customers at orientation, intake, and IPE 

development that equipment no longer used as planned must be offered for return. 

  FINDING 

3. Expenditures for Maintenance Services 

MRS's controls over expenditures for maintenance services did not ensure that all 

such expenditures were necessary and made in accordance with established 

policy. As a result, MRS paid for services not provided for in MRS policy. 

 MRS policy 6350, Maintenance, states that maintenance services may be provided 

only for additional costs, over and above normal living expenses, which customers 

incur because of their participation in assessments or IPE services. However, 

MRS's Cost Management Strategies guide states it is not the federal intent that 

MRS be a welfare program. The guide states that federal law and regulations 

clearly indicate that MRS is not responsible for the everyday costs that customers 

would incur for maintenance and transportation regardless of whether they 

participated in a rehabilitation program. 

 Of the 100 randomly selected MRS cases reviewed, 24 cases included 

maintenance service costs totaling $28,305. We noted that 14 (58%) of the 24 

cases did not support the need for maintenance service payments totaling $14,071. 

As a result, the services may not have been necessary and, therefore, may not 

have been in accordance with MRS policy. For example: 

 a. MRS provided assistance totaling $5,080 to a customer who was employed 

full time for gas, food, clothing, and household bills. Also, MRS provided this 

customer with $120 to assist with expunging the customer's criminal record. 

  b. MRS continued to provide assistance to a second customer when the 

customer was employed full time. Such assistance totaled $2,481 for mileage, 

lodging, and food costs during a three-month period while the customer was 

employed full time. In addition, MRS continued to provide job placement 

services totaling $216 for travel costs, which the customer incurred while 

traveling to a job interview, after the customer's IPE goal was achieved and 

the customer already obtained full-time employment. 

 c. MRS paid court costs totaling $450 for a third customer. MRS documented 

that the customer needed to pay the court costs because the customer was at 

risk of going to jail for three months if the costs were not paid. 

 RECOMMENDATION 

We recommend that MRS improve its controls over expenditures for maintenance 

services to ensure that all such expenditures are necessary and made in 

accordance with established policy. 

 AGENCY PRELIMINARY RESPONSE 

MRS agrees and will improve case management training and the case review 

process so that appropriate documentation is obtained for maintenance services 

expenditures made on behalf of MRS customers. MRS stated that this will involve 

increased monitoring along with individual, local, and system improvements. 

  FINDING 

4. Receipts for Purchased Services 

MRS did not obtain receipts to substantiate payments for purchases of services. 

As a result, MRS could not ensure that all payments were expended and utilized 

appropriately. 

 MRS policy 2080, Hard Copy Case Records Content and Order, and MRS 

policy 9200, Billing and Payment for Services, state that receipts for purchases of 

services shall be documented to substantiate those services provided. 

  Of the 100 randomly selected MRS cases reviewed, 30 cases lacked sufficient 

receipt-related documentation for 32 payments totaling $105,885. We noted: 

 a. MRS did not obtain receipts from 2 different vendors for vehicles and vehicle 

modifications totaling $37,315 and $39,645, respectively. The case files 

contained several quotes but did not contain final invoices for the vehicles and 

vehicle modifications purchased. 

 b. MRS provided 3 checks totaling $1,200 directly to a customer for the purchase 

of a vehicle. However, MRS did not receive documentation that the vehicle 

was actually purchased or received by the customer. In addition, shortly after 

MRS provided funds to the customer for the purchase of the vehicle, the case 

was closed by MRS at the request of the customer because of health 

concerns. 

 c. MRS provided 5 checks totaling $2,500 directly to a customer for employmentrelated 

relocation expenses. However, the case file did not contain any 

documentation substantiating these expenses. 

 d. MRS provided a payment of $471 directly to a customer to attend a real estate 

conference. This amount was to pay for transportation costs and hotel fees 

the customer incurred during the real estate conference. However, the case 

file did not contain any documentation substantiating these expenses. 

 RECOMMENDATION 

We recommend that MRS obtain receipts to substantiate payments for purchases 

of services. 

 AGENCY PRELIMINARY RESPONSE 

MRS agrees and will improve case management training and the case review 

process so that appropriate receipts to substantiate payments for purchases of 

services are obtained. MRS stated that this will involve increased monitoring along 

with individual, local, and system improvements. 

   AGENCY PRELIMINARY RESPONSE 

MRS agrees and will improve case management training and the case review 

process so that appropriate documentation verifying applicants' identities is 

obtained before services are provided. 

 MRS stated that it is in the process of changing its customer identification policy in 

response to a corrective action required by the federal Rehabilitation Services 

Administration. This change will clarify that other forms of evidence are acceptable 

for proving an individual's state residency. MRS also stated that the policy change 

is necessary to ensure that MRS applicants are not subject to a duration of 

residency requirement, which is prohibited by Section 101(a)(12) of the 

Rehabilitation Act and Title 34, Part 361, section 42(c)(1) of the Code of Federal 

Regulations. 

 MRS informed us that it will continue to submit application records from its case 

management system (Accessible Web-Based Activity and Reporting Environment 

[AWARE]) to the Social Security Administration every week for social security 

number verification. MRS stated that these records include four pieces of 

identifying information. MRS added that a discrepancy occurs in approximately 2% 

of the applications. In these instances, MRS stated that it works with the customer 

for up to 90 days to obtain a correction or the case is closed. 

  COORDINATION OF BENEFITS AND SERVICES 

 COMMENT 

Audit Objective: To assess the effectiveness of MRS's efforts to facilitate the 

coordination of benefits and services. 

 Audit Conclusion: We concluded that MRS's efforts to facilitate the coordination 

of benefits and services were moderately effective. Our audit disclosed one 

reportable condition related to comparable benefits and services (Finding 6). 

  AGENCY PRELIMINARY RESPONSE 

MRS agrees and will improve case management training and the case review 

process so that comparable benefits and services are utilized before MRS funds 

are expended. MRS stated that this will involve increased monitoring along with 

individual, local, and system improvements. 

  VIABLE AND SUSTAINABLE EMPLOYMENT 

 COMMENT 

Audit Objective: To assess the effectiveness of MRS's efforts to determine that 

services resulted in viable and sustainable employment. 

 Audit Conclusion: We concluded that MRS's efforts to determine that services 

resulted in viable and sustainable employment were effective. Our audit report 

does not include any reportable conditions related to this audit objective. 

       INTENTIONALLY BLANK PAGE 

      SUPPLEMENTAL INFORMATION 

      GLOSSARY 

  Reportable Condition: 

MRS did not always identify comparable 

benefits and services from other sources 

(Finding 6).  ~~~~~~~~~~ 

 Audit Objective: 

To assess the effectiveness of MRS's 

efforts to determine that services resulted 

in viable and sustainable employment. 

 Audit Conclusion: 

We concluded that MRS's efforts to 

determine that services resulted in viable 

and sustainable employment were 

effective. Our audit report does not 

include any reportable conditions related 

to this audit objective. 

 ~~~~~~~~~~ 

  Agency Response: 

Our audit report contains 6 findings and 

6 corresponding recommendations. 

MRS's preliminary response indicated 

that it agrees with all 6 

recommendations. 

 ~~~~~~~~~~ 

   January 11, 2012 

  Mr. Steven H. Hilfinger, Director 

Department of Licensing and Regulatory Affairs 

Ottawa Building 

Lansing, Michigan 

 Dear Mr. Hilfinger: 

 This is our report on the performance audit of Rehabilitation Service Expenditures, 

Michigan Rehabilitation Services, Department of Licensing and Regulatory Affairs. 

 This report contains our report summary; description of agency; audit objectives, scope, 

and methodology and agency responses and prior audit follow-up; comments, findings, 

recommendations, and agency preliminary responses; two exhibits, presented as 

supplemental information; and a glossary of acronyms and terms. 

 Our comments, findings, and recommendations are organized by audit objective. The 

agency preliminary responses were taken from the agency's responses subsequent to 

our audit fieldwork. The Michigan Compiled Laws and administrative procedures 

require that the audited agency develop a plan to comply with the audit 

recommendations and submit it within 60 days after release of the audit report to the 

Office of Internal Audit Services, State Budget Office. Within 30 days of receipt, the 

Office of Internal Audit Services is required to review the plan and either accept the plan 

as final or contact the agency to take additional steps to finalize the plan. 

 We appreciate the courtesy and cooperation extended to us during this audit. 

 Sincerely, 

  Thomas H. McTavish, C.P.A. 

Auditor General