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D A T E L I NE PENNSYLVANIA AUDITOR GENERAL JACK WAGNER SAYS WASTE, ABUSE, AND POTENTIAL FRAUD PERSISTS IN LIHEAP FOUR YEARS AFTER BEING FIRST IDENTIFIED Pennsylvania Auditor General Jack Wagner announced in a press release on August 10 that widespread deficiencies first identified in the Department of Public Welfare's administration of the Low- Income Home Energy Assistance Program four years ago still exist today—even after seven state employees were convicted of theft and other crimes and DPW spent more than $800,000 on a private firm hired to help fix the problems. Wagner said that a follow-up audit found that many of the same types of waste, abuse and potential fraud first identified in a June 2007 audit report continued to exist as of June 29, 2011. These included: Applicants using the Social Security Numbers of dead people and applying for benefits by using variations of an active Social Security Number, Applicants receiving benefits while serv- ing time in prison, Appl icants who underreported income, Applicants who submitted for double payments. "The Department of Public Welfare • • • • not only has failed to address many of the problems that we identified in our audit four years ago, but it has wasted $800,000 in taxpayer money on a fix that never occurred," Wagner said. "LIHEAP is a vital program helping needy Pennsylvania fami- lies heat their homes during the winter. The Department of Public Welfare must begin working now to fix LIHEAP, to make sure that funds are available for Pennsylvania families who truly need assistance." Wagner's follow-up special perfor- mance audit, with primary test work covering the period July 1, 2009 to June 30, 2010, was initiated to determine if DPW fixed the problems identified by his office four years ago. That audit found inade- quate policies and procedures, insufficient supervision, and inadequate oversight by FEATURED NEWS LIHEAP waste, abuse and fraud Marathon split final New biodiesel and Bioheat terminal Mass. energy efficiency program David Weekley Homes honors Trane Making buildings more energy efficient AltWheels Fleet Day AHRI June data Uponor's new VP DPW that resulted in potential applicant and employee fraud and abuse in six coun- ties examined. The Philadelphia district attorney relied in part on information uncovered by Wagner's audit to charge 18 people, including state and city employ- ees, with stealing more than $500,000 of LIHEAP funds and related crimes. Seven state employees, and six others, either pleaded guilty or were convicted, and received sentences that included prison time or probation and restitution. Wagner's special performance audit questioned DPW management's hiring of a Philadelphia law firm through a no- bid contract for administrative assistance. Auditors noted that legal expertise was not required and that the task could have been performed by welfare department employ- ees. In addition, the fact that DPW relied on a sole-source vendor instead of seeking competitive bids potentially inflated con- tract costs, Wagner said. "Competition and transparency should always be a part of the contracting process to ensure that Pennsylvania taxpayers are getting the most qualified bidder and the best possible price," Wagner said. The spe- cial performance audit also cited DPW for possible circumvention of the pro- curement process by permitting the law firm to subcontract the work to a forensic accounting firm. From February 2009 to January 2011, DPW paid more than $800,000 for con- tracted services, including $203,471 billed by the law firm to DPW for seven months in which no on-site monitoring services were performed. In addition, Wagner's auditors determined that the law firm failed to comply with contract provisions, which required the submission of detailed documentation supporting expenditures of services rendered for 10 of 12 months reviewed during the contract period. Other noted weaknesses in the law firm's monitoring process for discovering and curtailing deficiencies within LIHEAP include the failure to: Make unscheduled visits for investiga- tive or follow-up purposes, Address the process and security for bar-coded applications returned by the post office, Assess the timeliness of posting LIHEAP applications to the computer system used by DPW, Follow up with county assistance offices or crisis contractors to verify that correc- tive action was undertaken with regard to incomplete supervisory reviews, or Disclose or report significant program weaknesses in monitoring reports. Wagner's auditors also noted similar • • • • • weaknesses in monitoring reports com- pleted by a team of four DPW monitors. Wagner issued his special performance audit to allow adequate time for DPW to begin appropriate corrective action to fix the identified program deficien- cies before the start of the next heating season. In addition to the Department of the Auditor General contacting DPW in July 2008 to conduct a follow-up of the LIHEAP audit, in response to which DPW failed to provide documentation to demonstrate how DPW addressed the 25 recommendations issued in the June 2007 audit report, the office also has continued to follow up on most of these recom- mendations as part of other audits, which encompass auditing federal funds spent by the Commonwealth. However, most of these recommendations have not been adequately implemented by DPW. "Our patience is wearing out," Wagner said. "The Department of Public Welfare www.fueloilnews.com | FUEL OIL NEWS | SEPTEMBER 2011 3