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Legislative auditors flag internal-control gaps in Arkansas Medicaid single audit
Summary
Legislative audit staff told the Medicaid subcommittee that the FY24 single audit identified multiple internal-control deficiencies — including eligibility data‑matching, contractor cost allocation, and lack of a Medicaid recovery audit contractor — and that follow-up work and federal reporting are underway.
Legislative audit staff told members of the Medicaid subcommittee on Feb. 24 that Arkansas’ Medicaid program faces several internal-control weaknesses that the statewide single audit identified for fiscal year 2024.
David Gessaway, a legislative audit presenter, said Medicaid is audited every year because the program has been designated high risk by federal officials. He told the committee Medicaid accounts for roughly $6.5 billion — about 53% of the state’s $12.2 billion in federal expenditures in the most recent audited year. "Medicaid is the largest federal program in the state," Gessaway said.
The FY24 single audit findings summarized to the committee include: deficiencies in data matching used to identify recipients who are no longer eligible because of death or incarceration; improper contractor cost allocation where some managerial accounting costs were charged 100% to Medicaid though the work was only 68% Medicaid-related; failures in suspending and reinstating benefit coverage for incarcerated juveniles; weaknesses in provider eligibility documentation; and the state’s lack of a Medicaid recovery audit contractor (RAC) required by federal rules unless a state requests an exception.
Gessaway described the Single Audit Act and the Office of Management and Budget’s Uniform Guidance (2 CFR part 200) as the federal framework for this work and said the federal clearinghouse receives audit findings and monitors state follow-up. He said single-audit findings are presented to the full Legislative Joint Auditing Committee annually and that auditors will perform follow-up procedures in subsequent years to confirm corrective actions.
Committee members pressed staff for clarification: Representative Dahlton asked about the RAC requirement and whether the state had requested an exception; Gessaway confirmed the state had requested relief through the federal process. Gessaway also noted that OMIG and the Department of Human Services may report related findings through other audit channels.
The legislative audit presentation concluded with staff offering to answer detailed follow-up questions and to provide written materials to committee members. The committee did not take formal action on audit findings at the meeting; staff said the FY24 single audit was filed with LJAC in June 2025 and follow-up will continue during the audit cycle.
