Sloppy accounting 'severely misplaced' $300K at Michigan veterans home
Lansing — State officials said they are confident hundreds of thousands of dollars in discrepancies in resident accounts at the Grand Rapids Home for Veterans were “severely misplaced” and not missing because of malfeasance.
The discrepancies identified in an audit of the home’s performance between March 2017 and February 2018 were in part due to accounting practices in place prior to the Department of Technology, Management and Budget's takeover of accounting services for the home in 2016 and have since been reconciled, said Michael Gilliland, director of financial services of the Department of Technology, Management and Budget.
“We never saw even the appearance of evidence that someone took some money,” Gilliland said. “It was really just sloppy accounting.”
The Office of Auditor General’s report to a joint session of the House and Senate oversight committees Tuesday is the office’s third audit of the Grand Rapids home since 2016, when investigators uncovered insufficient care, inadequate staffing levels and other problems.
As of February 2018, the home had 259 members receiving nursing care and 24 staying at the facility’s domiciliary units. Around the same time, the home had roughly 540 state and contract employees.
While lawmakers noted marked improvements in the facility since the 2016 audit, they criticized the home for the new accounting and medication findings.
Following the meeting Tuesday, Rep. Matt Hall, R-Emmett Township, called for an expedited timeline for auditors to revisit the veterans home instead of waiting the typical 15 to 18 months between reviews.
The shortened timeline would ensure "that steps are being taken to rectify the concerns outlined in this performance audit," said Hall, chairman for the House Oversight Committee.
Rep. Cynthia A. Johnson, D-Detroit, questioned whether an independent forensic audit of the facility was required to better understand the discrepancies in member accounts.
“We’re talking about our veterans, we’re talking about their widows, we’re talking about the people that served this country,” Johnson said. “This is not deep enough as far as I’m concerned.”
The accounting issues, identified as differences ranging from $23,286 to $301,428 between member subsidiary accounts and the external bank balances, were one of two material conditions identified in the performance audit.
The shortfalls in the external bank balances were believed to have occurred when funds received on behalf of members were placed into an external general checking accounting instead of the external member bank accounts, the report said.
The veterans facility reconciled the difference between the accounts with 2018 revenue in August 2018, several months after the completion of the most recent audit, according to the report.
Sen. Pete Lucido, R-Shelby Township, scrutinized the shuffling of funds and questioned whether the findings show officials violated not only state policy, but also general accounting policies.
“Do you believe that there’s any breech of fiduciary responsibility and duty based on your accounting principles?” Lucido asked.
“Yes, in terms of the accounts not matching,” said audit manager Michael Ventura.
The accounting problems existed before the Department of Technology, Management and Budget'sinvolvement with the home, Gilliland said, and took some time to resolve since employees had to review three years of transactions in each member's account.
"You’re saying basically that you did not find that there was any money actually missing, it was just severely misplaced?” said Sen. Lana Theis, R-Brighton Township. "Is that a fair assessment?"
"Yes," Gilliland said.
Another material condition cited in the report were 766 former employees who still had accounts through the home’s electronic medical record and member financial system, which launched in 2015. The 766 accounts represented roughly 57% or the 1,338 active users with access to the software system.
A sampling of the accounts, which have since been deleted, was reviewed by the Office of Auditor General as part of its audit, Ventura said.
“Based on system sign-in logs, none of the 30 users that had departed had accessed the system after their departure,” Ventura said.
The audit also found four reportable conditions: early, late, missed or improper medication administration; easily guessed pass codes to the medication carts; the failure to resolve outstanding member assessment balances; and delays in disbursing funds from discharged or deceased members.