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NYS Comptroller

THOMAS P. DiNAPOLI

Taxpayers' Guide to State and Local Audits

Office of Alcoholism and Substance Abuse Services
Drug and Alcohol Treatment Program: Provider Claiming of Depreciation Expenses


Issued: June 08, 2016
Link to full audit report 2015-S-84
Link to 90-day response

Purpose
To determine whether the Office of Alcoholism and Substance Abuse Services (OASAS) is effectively monitoring Drug and Alcohol Treatment program contracts to ensure provider claims do not include State reimbursement for depreciation expenses. The audit covered the period January 1, 2010 through June 30, 2014.

Background
The New York State Office of Alcoholism and Substance Abuse Services (OASAS) oversees the nation’s largest and most diverse addiction treatment system. Its mission is to provide accessible, cost‑effective, quality services that strengthen communities, schools, and families through alcohol and drug prevention and treatment and to meet clients’ individual needs through specialized services. OASAS enters into agreements with providers for delivery of specific alcohol- and drug-related services. OASAS reimburses the providers for the net costs they incur to provide the services for each contracted program, up to the maximum budgeted amount. The costs are reported via an annual Consolidated Fiscal Report (CFR), which is commonly used by several New York State agencies to monitor and oversee service providers’ financial activity. According to the Consolidated Fiscal and Reporting Manual (Manual), OASAS providers are not allowed to budget for or claim any type of depreciation expense for reimbursement. OASAS’ oversight responsibility includes ensuring provider compliance with the Manual when submitting reimbursement claims.

Key Findings

  • OASAS is not effectively monitoring Drug and Alcohol Treatment program contracts to ensure provider claims do not include State reimbursement for depreciation expenses.
  • We found providers inappropriately claimed $2,675,045 in depreciation expenses, of which $2,220,807 was funded by OASAS. Also, OASAS could potentially use the remaining $454,238 for inappropriate increases to providers’ future program budgets.

Key Recommendations

  • Recover from identified providers the $2,220,807 in depreciation expenses claimed that are not allowable.
  • Make sure the $454,238 in non-funded depreciation expenses were/are not used to increase provider budgets.
  • Establish effective monitoring controls to ensure provider claims do not include depreciation expenses. The controls should include (but not be limited to):
    • The use of enhanced data analytics, as described in this report, to identify depreciation expenses that providers inappropriately claim for reimbursement; and
    • Incorporation of specific criteria in the fiscal review process stating that depreciation expenses are not allowable, and specific audit steps in the Fiscal Review Instrument to identify and disallow claimed depreciation expenses.

Other Related Audits/Reports of Interest

Office of Alcoholism and Substance Abuse Services: Samaritan Village, Inc.: Chemical Dependency Services Program (2011-S-38)


State Government Accountability Contact Information:
Audit Director: John Buyce
Phone: (518) 474-3271; Email: StateGovernmentAccountability@osc.state.ny.us
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236