Maricopa Managed Care Systems MHP and ALTCS funds report on audit of financial statements: June 30,...

              Maricopa Managed Care Systems' MHP and ALTCS Funds



DEBRA K. DAVENPORT, CPA AUDITOR GENERAL



STATE OF ARIZONA OFFICE OF THE AUDITOR GENERAL



WILLIAM THOMSON DEPUTY AUDITOR GENERAL



Independent Auditors' Report



Members of the Arizona State Legislature The Board of Supervisors of Maricopa County, Arizona We were engaged to audit the accompanying financial statements of the Maricopa Managed Care Systems' Maricopa Health Plan (MHP) and Arizona Long-Term Care System (ALTCS) Funds as of and for the year ended June 30, 2005, as listed in the table of contents. These financial statements are the responsibility of the Systems' management. As discussed in Note 1, the Maricopa Managed Care Systems' MHP and ALTCS Funds are intended to present the financial position, and the changes in financial position and cash flows of only that portion of the business-type activities and major funds of Maricopa County that is attributable to the Systems' MHP and ALTCS Funds. The Maricopa Managed Care Systems had inadequate internal controls for processing medical claims and accounting for prepayments made to medical providers. As a result, we could not rely on the Systems' financial reporting system to generate reliable information for medical expenses, prepaid expenses, and medical claims payable. Further, the Systems' records did not permit us to apply auditing procedures sufficient to determine whether the amounts reported for medical expenses, prepaid expenses, and medical claims payable in the financial statements were accurate. In addition, these control deficiencies affected the amounts reported for reinsurance revenues, reinsurance receivable, due from other county funds, and due to other county funds. Since the Maricopa Managed Care Systems did not maintain adequate internal controls for processing medical claims and accounting for prepayments made to medical providers and we were not able to apply auditing procedures to satisfy ourselves as to the amounts reported for medical expenses, prepaid expenses, and medical claims payable, the scope of our work was not sufficient to enable us to express, and we do not express, an opinion on the financial statements of the Maricopa Managed Care Systems' MHP and ALTCS Funds as of and for the year ended June 30, 2005. As described in Note 1, the Maricopa Managed Care Systems implemented the provisions of Governmental Accounting Standards Board (GASB) Statement No. 40, Deposit and Investment Risk Disclosures, for the year ended June 30, 2005, which represents a change in accounting principle.



Debbie Davenport Auditor General November 6, 2006

2910 NORTH 44

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STREET   SUITE 410   PHOENIX, ARIZONA 85018   (602) 553-0333   FAX (602) 553-0051