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The Louisiana Office of Group Benefits filed inaccurate financial reports for the fifth consecutive year in 2022, due in part to the lack of an “effective review and reconciliation process,” according to the Louisiana Legislative Auditor.
This is the same agency that made the controversial switch of state workers prescription coverage to CVS Caremark. That move was said to be a “money-saving” move by the Division of Administration. Now the Legislative Auditor’s audit of OGB said there are problems with accounting for prescription drug money, and the problem has persisted for years.
LLA Mike Waguespack issued a report last week that examined the fiscal year 2022 financial information, reporting and compliance at the Office of Group Benefits, which provides health and life insurance benefits to state employees, retirees, and dependents.
“For the fifth consecutive year, OGB, through the Office of Finance and Support Services, submitted annual fiscal reports to the Office of Statewide Reporting and Accounting Policy with errors requiring adjustments,” the report read.
The issues involved a custodial fund with employer contributions overstated by $36.7 million, deductions for health and life benefits overstated by $33.6 million and payables understated by $3.1 million.
“Prior-year pharmacy rebates collected in the current year were not properly allocated to the custodial fund causing cash to be understated in the custodial fund and overstated in the general fund by $32 million,” auditors wrote.
Payables in the general fund were understated by $17.2 million, while accrual for subsidy receivables were not properly entered into the state’s annual financial report portal, which resulted in revenues and receivables in the government wide AFR to be understated by $30 million.
“The report used by OFSS to allocate rebates to the custodial fund did not include prior year rebates collected in the current year,” according to the report. “In addition, OFSS does not have an effective review and reconciliation process in place to identify and correct errors, including ensuring amounts are correctly input into OSRAP’s AFR portal.”
The LLA contends officials should test AFR data and include a supervisor review to prevent errors prior to submitting reports to OSRAP.
“Failure to establish adequate controls increases the risk that errors and omissions may occur and remain undetected,” the report read.
Other aspects of OGB’s finances were materially correct.
Assistant Commissioner for Statewide Services Desiree Honore Thomas responded to the LLA report in a letter to Waguespack on Dec. 19 that blamed the issues on changes to the way OGB reports its finances.
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