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Audit Report

Denver’s Property Tax Spending for Intellectual and Developmental Disabilities: Denver Human Services and Rocky Mountain Human Services

To review Denver Human Services’ oversight of its contract with Rocky Mountain Human Services, and to determine whether Denver Human Services and Rocky Mountain managed, allocated, and spent— in accordance with their contract and with City ordinance—the portion of City property tax revenue dedicated to helping Denver residents with intellectual and developmental disabilities.

Watch the Audit Committee presentation here soon.

Denver Human Services manages millions of dollars in dedicated property tax revenue that pays for services for residents with intellectual and developmental disabilities.

To provide these services, Denver Human Services contracts with the City’s state-designated community-centered board: Rocky Mountain Human Services. Rocky Mountain uses the dedicated tax dollars to provide case management, direct services, and flexible service options and to address individual needs unmet by federal and state programs.

Denver Human Services’ Lack of Oversight Prevents It from Validating that Taxpayer Funds Were Spent as Intended

  • Denver Human Services allowed Rocky Mountain Human Services to use an unacceptable method for determining monthly expense reimbursements and did not validate whether Rocky Mountain spent City tax dollars properly.
  • Denver Human Services violated contract requirements when making budget amendments.
  • Denver Human Services did not monitor whether Rocky Mountain achieved outputs for its special projects, as required.
  • Denver Human Services’ Internal Audit Division incorrectly spent the City’s dedicated property tax dollars on unrelated work, did not monitor the Rocky Mountain contract, and lacks an annual risk assessment to identify what it should audit.

Rocky Mountain Human Services Appears to Provide Quality Services but Could Improve Its Financial Accountability

  • Parents and legal guardians were satisfied with the services their children received from Rocky Mountain’s Early Intervention Department. But Rocky Mountain does not conduct its own satisfaction surveys with the people it serves.
  • Rocky Mountain lacked accountability over special projects.
  • Rocky Mountain inappropriately served non-Denver residents using the City’s dedicated property tax funds.
  • Rocky Mountain service coordinators did not comply with their policies and procedures for overseeing how the City’s tax dollars are spent.
  • Rocky Mountain did not follow its procedures for approving requests through its Client Assistance Program. Both Rocky Mountain’s Unmet Needs Program and its Family Support Services Department did not ensure services were provided accurately and that City tax dollars were spent appropriately.

Rocky Mountain Human Services’ Decision-Making When Interacting with Its Community Advisory Council Lacks Transparency

Rocky Mountain’s management appeared to make funding decisions without providing written responses to council’s recommendations.

1.1 Enforce Contract Reimbursement Requirement – The executive director of Denver Human Services should enforce the reimbursement provision of its contract with Rocky Mountain Human Services. The executive director should also disallow the reimbursement of expenses that Rocky Mountain does not adequately support with evidence.

Agency Response: Disagree (See pg 44 for Agency Narrative, see pg 46 for Auditor’s Addendum)

1.2 Implement Process for Invoice Review – The executive director of Denver Human Services should work with Rocky Mountain Human Services to agree on the kind of source documentation necessary to validate expenses for any department included on Rocky Mountain’s monthly reimbursement request.

Agency Response: Disagree (See pg 47 for Agency Narrative, see pg 47 for Auditor’s Addendum)

1.3 Verify Accuracy of Special Project Outputs – The executive director of Denver Human Services should establish procedures for monitoring the agreed-upon goals stated in Rocky Mountain Human Services’ subcontracts.

Agency Response: Agree, Implementation Date – December 31, 2019

1.4 Develop an Annual Risk Assessment Process – The executive director of Denver Human Services should ensure its Internal Audit Division establishes and implements an annual risk assessment process related to its contract with Rocky Mountain Human Services.

Agency Response: Agree, Implementation Date – October 31, 2019

1.5 Ensure Proper Use of Taxpayer Funds – The executive director of Denver Human Services should ensure taxpayer dollars dedicated to helping those with intellectual and developmental disabilities are not spent to perform internal audit work unrelated to the contract with Rocky Mountain Human Services.

Agency Response: Disagree (See pg 48 for Agency Narrative, see pg 49 for Auditor’s Addendum)

1.6  Enforce Contract Requirements for Budget Changes – The executive director of Denver Human Services should ensure all department personnel responsible for overseeing the contract with Rocky Mountain Human Services have a complete understanding of the contract’s requirement for changing Rocky Mountain’s budget. Further, the executive director should develop internal controls to ensure all budget changes are made in compliance with contract requirements.

Agency Response: Agree, Implementation Date – December 31, 2019

2.1 Gauge Client Satisfaction – The executive director of Rocky Mountain Human Services should develop and administer a method that incorporates leading practices when gauging the satisfaction of individuals receiving its case management services.

Agency Response: Agree, Implementation Date – June 30, 2020

2.2 Improve Monitoring of Special Projects Subcontracts – The executive director of Rocky Mountain Human Services should establish and implement policies and procedures to ensure subcontractor expenses are accurate and that agreed-upon goals in the subcontracts are fulfilled.

Agency Response: Agree, Implementation Date – December 31, 2019

2.3 Verify Residency – The executive director of Rocky Mountain Human Services should ensure staff are aware of the residency requirement for Denver’s dedicated property tax dollars and of Denver’s city boundaries. Additionally, the executive director should ensure Rocky Mountain personnel verify all addresses for individuals receiving services with the City’s property tax dollars and that Rocky Mountain personnel should do so using an accurate map of Denver, such as the one managed by the Assessor’s Office.

Agency Response: Agree, Implementation Date – Completed

2.4 Ensure Consistent Delivery of Case Management Services – The executive director of Rocky Mountain Human Services should implement internal controls to ensure the organization’s personnel comply with all requirements for serving Denver residents using the City’s dedicated tax dollars. This could take the form of alerts in case management system software that notify service coordinators of upcoming requirements prior to applicable deadlines.

Agency Response: Agree, Implementation Date – December 31, 2019

2.5 Ensure Appropriateness of Client Assistance Program Payments – The executive director of Rocky Mountain Human Services should implement internal controls to ensure payments through the Client Assistance Program are made only after all other funding sources have been exhausted, are not used to buy prohibited items, and are made to benefit only a Denver resident with an intellectual and developmental disability.

Agency Response: Agree, Implementation Date – December 31, 2019

2.6 Implement Automatic Verification in Invoice Software – The executive director of Rocky Mountain Human Services should ensure the software system used to process service providers’ invoices can identify instances when dates of service, types of service, or available units of service listed on the invoice do not match an individual’s prior authorization request.

Agency Response: Agree, Implementation Date – Completed

2.7 Improve Approval Process for Family Support Services – The executive director of Rocky Mountain Human Services should ensure service coordinators document whether other funding sources were exhausted before approving money from family support services. The executive director should also strengthen the existing approval process, such as requiring secondary reviews, to ensure all funding is disbursed in accordance with Rocky Mountain’s policies and procedures.

Agency Response: Agree, Implementation Date – December 31, 2019

3.1 Enhance Communication and Transparency – The executive director of Rocky Mountain Human Services should make it a priority to respond to the Community Advisory Council’s recommendations in writing. At a minimum, such responses should explain why Rocky Mountain selected certain projects and not others, particularly when decisions deviate from the council’s recommendations.

Agency Response: Agree, Implementation Date – December 31, 2019

Follow-up report

A follow-up report is forthcoming. 

Audit Team: Katja E.V. Freeman, Patrick Schafer, Anna Hansen, Brandon Stolba, Chris Wilson, Daniel Summers
Methodological Support: Samuel Gallaher, Robert Persichitte