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YELLOW SHEET Office of the State Auditor of Missouri |
August 22, 2001
Report No. 2001-64
The
following problems were discovered as a result of an audit conducted by our
office of the Department of Economic Development, Division of Professional
Registration and the Missouri State Board of Nursing.
Because
of weak financial planning and monitoring, and inadequate or incomplete
information over a period of years, in August 2000 the Missouri State Board of
Nursing (board) Fund was depleted.� Both
the Division of Professional Registration (DPR), and the board failed to
recognize in a timely manner the declining financial condition of the board�s funds
and take appropriate measures to stabilize the fund.
On
August 21, 2000, the division notified the board that the board�s fund had been
depleted.� As a result, the board did
not have sufficient cash to pay expenses from August 2000 through March 2001.� A deficit for that period was estimated at
approximately $1.9 million.� On
September 18, 2000, the board received a loan from funds of the Office of
Administration designated for cash flow assistance to various state funds.� From September 2000 through March 2001, the
amounts borrowed ranged from $171,000 to $880,000.� The board�s use of these funds resulted in interest charges of
more than $12,500.
The
board and the Division of Professional Registration share responsibilities for
the fiscal management and control of the board�s fund.� License renewal fees have remained the same
since 1993 and other fees since 1983.�
In addition, the number of licensed nurses has been decreasing.� Weaknesses in the board�s financial planning
and monitoring prevented the board from initiating fee increases in a timely
manner that would have averted the depletion of the board�s fund.� Furthermore, financial monitoring and
information provided by the division was also deficient which affected the
board�s ability to monitor fund operations.��
When adjustments in fees are required, the board should propose those
adjustments in a timely manner.
Since 1997, the Division of Professional Registration has
been pursuing the acquisition and implementation of an automated licensing system
and an interactive optical imaging system, which would be used by all of its
boards.� A team made up of staff from
each board worked on this acquisition.�
The costs of these new systems would be allocated to the various
boards.� In March 1998, the division
accepted an offer of $778,722 for the licensing system and $708,960 for the
optical imaging system.� The licensing
system was first used in September 1999.�
The actual cost of the licensing�
system was $661,379.� The optical
imaging system has not yet been installed.
The Division of Professional Registration boards were not
informed timely or accurately of the costs of these systems.�� During the planning stages for these
systems, the former division chief accountant told the boards that the
licensing system would cost between $300,000 and $400,000.� The boards thought that these costs would be
made up from the savings from needing fewer division employees and no long
needing the work of the Department of Economic Development�s information system
employees.� The plans and costs of the
new systems changed, but the boards were not promptly informed of cost changes.
The division did not officially notify the boards of these significant cost
issues until November 1998, more than eight months after the division had
agreed to purchase the new systems.�
These costs placed financial hardships on some of the boards�
funds.� Had more timely and accurate
cost information been provided, measures could have been taken that could have
alleviated some of these hardships.� The
division stopped the installation of the optical imaging system after it had
already incurred costs of approximately $197,000 for computer equipment and
system design.� This equipment remains
idle and may become obsolete.
The Division of Professional Registration allocated costs
of approximately $3.4 million during the year ended June 30, 2000.� Our audit noted several concerns regarding
the division�s cost allocation plan.�
The three-year licensee average used to distribute costs does not appear
to be an equitable method to allocate indirect costs to the boards.� The division does not allocate indirect
costs to new boards until the new boards issue licenses.� The division and board personnel duplicate
some of the work in paying invoices.�
The division�s Management Information System employees� time charges do
not reflect the actual time worked for each board.� Time spent by the Central Investigation Unit employees on the
Office of Athletics was not included in the cost allocation calculation.� This resulted in personal service overhead
costs not being allocated to the Office of Athletics.
More than 840 complaints requiring investigations were
filed with the Missouri State Board of Nursing during the year ended June 30,
2000, representing a significant increase over earlier years.� A written plan for investigating a case or
an estimate of the time required to complete the investigation is not
prepared.� In addition, the board has
not reviewed the procedures used for investigations.� To ensure investigations are completed timely and to allow the
board to manage its expenditures, the investigators should submit a plan and an
estimate of the time required to complete an investigation to the board for
their approval before the investigator begins work on the case.
Investigations performed by consultants are much more
costly than investigations performed by board employees.� The board employs a chief investigator and
two staff investigators.� In addition,
the board uses the Division of Professional Registration Central Investigative
Unit (CIU) and consultants.� For the
year ended June 30, 2000, the average cost to investigate a case was $629 for
board employees (excluding the chief investigator who completes mainly
investigations that can be done without travel), $612 for the CIU, and $900 for
consultants.� Contract investigators
completed 480 cases in the year ended June 30, 2000.� As a result, the board spent $130,080 more on consultants than if
the board had a sufficient number of employees to complete these
investigations.
The Division of Professional Registration maintained a
fleet of eight vehicles for the use of all thirty-two boards during the year
ended June 30, 2000.� This fleet of
vehicles may not be necessary and the methods used to allocate vehicle costs to
the boards need to be changed.
